IOX Cable & Nokia ASN to Build 8,850km Subsea System

​IOX Cable Ltd and Alcatel Submarine Networks (ASN) have signed a turnkey agreement to build the first open subsea cable connecting Mauritius and the island of Rodrigues to South Africa and India.

IOX Cable Map

Source: IOX

The new IOX Cable System cable system will span more than 8,850km and will provide an ultimate design capacity of over 13 Tbit/s per fiber pair. It is set to enhance communications capabilities along the Puducherry, India, to East London, South Africa route. It will provide Mauritius with route diversity and connect Rodrigues for the first time to a submarine cable, enhancing ultra-high speed broadband services.

“IOX is committed to delivering its end-users with advanced infrastructures that incorporate technology innovations,” said Arunachalam Kandasamy, founder and CEO of IOX Cable Ltd.

“Leveraging ASN’s state-of-the-art technologies we will be able to continue to support and drive broadband infrastructure development based on new socio-economic models centered around the new digital economy.”

The deployment of the IOX Cable System will increase the availability of ultra-high speed broadband services, and “reinforce Mauritius as a communication hub in sub-Saharan Africa,” according to IOX, and will create a gateway to the continent and a new alternate route between Asia and Africa.

Philippe Piron, president of Alcatel Submarine Networks, said: “We are proud to support IOX in this project, one which will be a step-change in capacity for Mauritius and Rodrigues. ASN is confident that the bandwidth, resilience and traffic routing of the IOX Cable System, combined with our technology capabilities, will enable us to address the fast-evolving expectations and demands of end-users.”

The system’s deployment will support ultra-fast data transmission to address the growth of digital communications and cloud computing requirements, enabling IOX to offer differentiated services, while strengthening service, reliability, and redundancy to existing cables.

IOX has said that it is committed to converting Mauritius by 2019 to an international data hosting centre and key exchange point for the ICT, financial, and commodity sectors in the Indian Ocean.

Source: Capacity Media

ANALYSIS: It is noticeable that Philip Piron’s quote refers to addressing the needs of end users in the island communities of Mauritius and Rodrigues while Arunachalam Kandasamy talks about connectivity between Africa and Asia. Of course, this 21st Century cable is going to cope easily with demand generated from the islands but there must be a larger strategic intent to justify the business case for it.

Arunachalam Kandasamy was formerly employed by SEACOM which operates its own submarine cable system along the east coast of Africa with onward connections to the Mediterranean and to India. IOX looks like the redundant part of a ring that perhaps SEACOM contemplated when they were designing to route around 2005.

A more interesting approach would have been to design a cable which could challenge the monopoly of the SAFE submarine fiber optic cable system, connecting South Africa to Penang, Malaysia with a branch into Cochin, India. With no competition, SAFE will still be charging extraordinarily high rates for connectivity between South East Asia and Africa, suppressing non-latency-sensitive demand for connectivity between Africa and Europe, avoiding the Suez Canal.

SEACOM Cable Map

Source: SEACOM

India is notorious for its exorbitant interconnection rates and yet, this is where Kandasamy has chosen to terminate. In this respect, IOX is a “me too” system which adds nothing except redundancy and minimal incremental demand from Mauritius and Rodrigues when compared with SEACOM.

The supply contract between Nokia ASN and IOX is unlikely to be anywhere close to going into force. Kandasamy has talked previously about relying on vendor finance and the Indo - Mauritius Double Taxation Avoidance Agreement for funding, with SEACOM and Mauritius Telecom as anchor tenants but this is going to be a tough sell to investors.

​Nokia ASN, for its part, may have offered some financial support because, once again, the Company is on the selling block. The last time that Nokia attempted to spin off ASN, the market saw uncharacteristically aggressive Alcatel sales representatives cutting margins and matching prices of even the new market entrants who have to price low to buy market share. We are likely to see a flurry of supply contracts signed by ASN in the coming months as they try to enhance their order book and drive up the valuation.